Argentine e-commerce solutions startup Nuvemshop (or Tiendanube) recently announced a $30 million round in a Series C, co-led by Kaszek Ventures and Qualcomm Ventures. Raising this amount during the pandemic is directly related to investor confidence in a business that has worked in times of uncertainty. Nuvemshop is part of the select group of startups that managed to grow amid the crisis, fueled by social distancing and the growing need of buying essential and non essential items online.
Nuvemshop co-founder and COO Alejandro Vázquez said in an interview with LABS that retailers within the company’s GMV (Gross Merchandise Volume) are set to grow more than five times and that a great part of the growth occurred during the COVID-19 pandemic. The startup doesn’t disclose any revenues.
With all its operations based on a SaaS (Software as a Service) model, Nuvemshop registered a significant growth on their current customers and at the same time new businesses adopted the platform to be able to sell online.
“We have always had this mindset of building simple products that would give the shopkeeper autonomy. The pandemic showed us the value of this. We saw businesses shutting brick-and-mortar stores and, desperately, these businesses sought alternatives. For many of them the solution was to create e-commerce” says Vázquez.
Brazil is Nuvemshop’s biggest focus in Latin America
Nuvemshop is used by more than 65,000 retailers in Latin America (the number of stores more than doubled, since it was nearly 30,000 at the beginning of the year). These retailers sold more than $1 billion in GMV this year, with a forecast for the volume traded to reach $5 billion by 2025. This represents more than one sale per second on the startup’s platform, according to Vázquez. Almost half of these retailers are from Brazil – according to the platform’s co-founder, Brazilian retailers also sell more, on average, than Argentines and Mexicans.
For this reason, the company’s main focus in Latin America is Brazil, which expects a large volume of sales for this year’s Black Friday. Ebit/Nielsen consultancy projects a 27% increase in sales this year compared to the 2019 event. “The numbers for this year and for Black Friday are impressive as they reflect the consumer’s adaptation to online shopping. In this pandemic, e-commerce has become a safe haven by efficiently and practically replacing the physical environment,” says Ebit/Nielsen leader, Júlia Ávila, in the survey.
“We are not a marketplace, but we are able to see new consumers within the ecosystem,” recalls Vázquez. He says that from February to June the number of new users grew four times.
In Brazil, the creation of digital accounts for the payment of the emergency aid has contributed to a greater embrace of finance institutions by Brazilians, which, according to Nielsen, is a factor that should help boost trade, coupled with the increasingly common habit of shopping online, driven by COVID-19. According to the Brazilian Electronic Commerce Association (AbComm, in Portuguese), 150,000 online stores were created between March and July this year. Of these, 80% chose to sell on large platforms.
Serving small and medium-sized businesses in the region
Created in Buenos Aires in 2011, Nuvemshop now has 300 employees between offices in Argentina, São Paulo, and now also in Mexico. Founders Santiago Sosa, Alejandro Vázquez, Martin Palombo and Alejandro Alfonso have known each other from college, when they designed a marketplace project.
“What we saw from that first experience was that entrepreneurs were using the product that we had created as an online storefront. We understood that it was a great difficulty to have a virtual store and most businesses did not even know where to start,” explains Vázquez. That was when they decided to change the model to a platform that was simple for small and medium-sized companies to handle.
“Our focus today is not enterprises, eventually it will be. In the next five years we are working to be the obvious option for most businesses in Latin America,” he says.
For the next 18 months, the firm wants to further expand in the region, but for now, the new round will be invested in the development of the platform, allowing partners to integrate solutions and develop payment and logistics APIs within Nuvemshop.
Vázquez believes that e-commerce will represent at least 80% of retail sales in Latin America in up to 20 years. A market share that several rivals in the region are fighting for, such as Magazine Luiza, through Parceiro Magalu, Shopify, MercadoLibre, B2W, Locaweb and TOTVS.
But it is not like the brick-and-mortar stores will end, according to the COO. “Offline will continue to be important. Not only for sales but also for experience, for brand creation. I think that the physical stores will have this role of experiences now, more than the representativeness in sales.”